A former Thiess John Holland manager has admitted the company paid bogus invoices to hide a deal for which negotiations had been kicked off by Bill Shorten, whose Australian Workers Union had "sold out" the 36-hour week when he was head.

Sydney's Olympic velodrome faces the end

The moment former exec admits to fake invoices

Former Thiess exec Julian Rzesniowiecki admits the company issued bogus invoices to hide a deal struck with the AWU to pay $300 K for an organiser.

Former Thiess John Holland human resources general manager Julian Rzesniowiecki gave evidence to the royal commission into union corruption that the AWU had politically "sold out" the 36-hour week as part of a proposed agreement, in a diary note of January 7, 2005.

He said a diary note about the terms of the deal being "explained generally" was a reference to avoiding conflict with militant union the CFMEU.

Cyclists enjoy the Eastlink Open day in June 2008. Photo: Wayne Taylor

Mr Rzesniowiecki told the royal commission hearing on Tuesday that the company had agreed to making a nominal payment of $100,000 a year for the three-year term of a major roads project in Victoria to pay the AWU for a full-time site organiser.

Mr Shorten was part of the early discussions about the agreement when he was Victorian state secretary and national secretary of the AWU, the commission heard. Embattled Victorian Labor MP Cesar Melhem was said to have completed the deal when he was an official of the AWU.

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In a signed witness statement, Mr Rzesniowiecki said his diary note of December 14, 2004, referred to discussions about the appointment of union organisers as suggested by Mr Shorten.

He said his diary note which said "will accept less than rules" was a reference to the demarcation of work between the CFMEU and the AWU and "was an offer by Bill Shorten to accept less than his union's constitutional rule coverage in order to enable agreement to be reached with the CFMEU".

The evidence follows that from another former Thiess manager, Stephen Sasse, who said his early discussions about a payment of $300,000 to the union were part of a deal over the $2.5 billion EastLink Melbourne road project discussed with Mr Shorten in late 2004.

Mr Rzesniowiecki gave evidence to a private hearing of the royal commission that an agreement was reached between now Opposition Leader Bill Shorten, former Thiess executive Stephen Sasse and "probably" Cesar Melhem, before December 2004.

An arrangement for up to six organisers was discussed at one point, but just one was finally agreed on a full-time basis, involving a nominal payment of $100,000 a year plus GST, the commission was told.

Appearing at times nervous, Mr Rzesniowiecki said the agreement was not common knowledge and not something the company was comfortable being made public.

Asked by counsel assisting the commission, Jeremy Stoljar, what arrangement was made, Mr Rzesniowiecki said invoices were made out for advertising, sponsorship of events and other things that could be approved within the project.

Mr Rzesniowiecki said he did not want the invoices described as providing for a union organiser.

"So far as you were concerned, you were paying this invoice believing it to be payment for the provision of an organiser on the project?," Mr Stoljar asked.

"For organising resources, that's correct," Mr Rzesniowiecki.

"The main purpose was to disguise the fact that we were funding an organiser.

"I mean, we had an agreement between the union and ourselves that we'd provide some money and that's what we did."

Asked if this led to a false invoice trail being established, Mr Rzesniowiecki replied, "well, this is the invoice trail that was set up, correct".

Mr Rzesniowiecki said the company had not commissioned any work on research into back strain for which a $33,000 invoice was paid.

"We hadn't commissioned it, no," he said.

"And you didn't receive any report of the research work that was done?," Mr Stoljar asked.

"I don't recall receiving any report."

"The payment was made as an instalment on the $100,000 that you regarded as owing under the agreement that had been struck. And you weren't concerned whether any research work had been done or not?," Mr Stoljar said.

"That's correct," Mr Rzesniowiecki replied.

A $9000 payment for 20 tickets to a population forum was an instalment on the $100,000.

"That was going to be paid for the provision of organising services?," Mr Stoljar asked.

"That's correct, yes."

Asked how the arrangement for a $300,000 payment to the AWU came about, Mr Rzesniowiecki said there were "high-level discussions" between the AWU and representatives of the joint-venture parents and the parties to those discussions before he joined the project.

The discussions were about how the union would represent itself on the site.

"My understanding was that there was sort of an arrangement, you know, agreed that the joint venture would provide resources to the AWU to assist them to be able to provide organisers to the project, and that's how it came about," he said.

"My initial understanding of what I'd arranged with Mr Melhem was that the invoices would be sent to John Holland and they wouldn't come to the project, and then at some point they were redirected from Holland's to the project, so Mr Melhem and I sorted out an arrangement as to how these invoices would be struck so they could be processed through the joint venture."

Mr Shorten said he had not heard Mr Rzesniowiecki's testimony on Tuesday "but I certainly stand by the 900 questions and answers I gave in the royal commission".

The Opposition Leader highlighted that during evidence on Monday from Stephen Sasse, the former executive had "made it really clear, black-and-white clear ... that there was no arrangement of the nature that you're just putting to me now", referring to the deal between the construction company and the union.

But Mr Shorten could not say whether he had had discussions about Thiess John Holland funding an organiser or organisers on the project for his former union, the AWU, because "I don't recall every discussion".

Earlier on Tuesday, Mr Rzesniowiecki's said that he had a diary note from December 2004 that recorded Mr Shorten had suggested Thiess John Holland fund the equivalent of four AWU staff, which later became just one organiser.

Mr Shorten said he had not had a chance to listen to the evidence given earlier in the day "so I'm not going to comment on evidence I haven't seen".

"As I've said since I appeared at the royal commission, I did not strike any agreement of the nature which you are raising, full stop," he said.

"The point about it is, as you know, is it's all about was there an agreement and the evidence, incontrovertible - and I should also say some of the evidence showing there was no agreement wasn't released by the royal commission, it had to be chased by lawyers representing myself.

"Was there an agreement? No, there wasn't."

Mr Shorten appeared before the commission on July 8 and July 9. He is not due to appear again but the commission has set aside a reserve day.